TalkTalk's mobile service, including calls and data, runs over the Vodafone network. Photograph: Graham Turner for the Guardian

TalkTalk has launched a "small plan" basic mobile phone package with a free smartphone – for just £5 a month.

For this you get a Samsung Galaxy Y with 100 minutes of calls, 250 texts and 100Mb of data. The deal will appeal to occasional mobile users who want access to a whizzy handset without spending a fortune. But to get it, you have to lock yourself in to a two-year contract.

The company's £10-a-month "medium plan", which offers the same free handset but with 300 minutes of calls, 3,000 texts and 500Mb of data a month, looks a better all-round package given most people use phones more than they expect.

In both cases customers signing up online at mobile.talktalk.co.uk get double the data – giving the £10-a-month deal a respectable 1Gb of downloads a month. Other handsets, including BlackBerry, are also on offer depending on the monthly spend.

Before you sign-up, be aware that the "out of bundle" extra costs are high: calls are 30p a minute, and at 5p per Mb data costs can soon add up.

Facebook addicts could soon run up a huge bill if updating pages on the go. And make sure your phone isn't going online for system updates and, again, racking up big data bills.

Tristia Clarke, TalkTalk's commercial director, says: "We have stripped out all the unnecessary costs, which are passed on in monthly bills, in order to offer the best value to our customers." All calls and data services are carried over the Vodafone network.